U P Hotels Ltd Management Discussions

Industry Structure, Development, Opportunities and Outlook

The Indian hospitality industry is experiencing strong growth in 2025, with rising occupancy rates, average room rates, and revenue per available room (Rev PAR). This is fuelled by a combination of increased domestic tourism, a resurgence in MICE (Meetings, Incentives, Conferences, and Exhibitions) events, and ongoing infrastructure development. Technology adoption, sustainability initiatives, and a focus on personalized guest experiences are also shaping the industrys evolution.

The industry is projected to see its highest Rev PAR in a decade, with occupancy rates potentially reaching 72-74% by FY2026. Investor confidence is high, with significant investments expected, potentially reaching USD 1 billion by 2028. Increased activity in business travel, conferences, and events, including weddings, is contributing to higher occupancy and room rates Demand for luxury and experiential travel is growing, with hotels catering to these preferences. Ongoing infrastructure projects and government tourism initiatives are supporting the growth of the sector. Hotels are adopting technology for contactless check-ins, Al-powered customer service, and personalized experiences Sustainability is becoming a key focus, with hotels implementing green building practices, zero-waste operations, and renewable energy solutions.

While domestic travel is strong, FTA have not yet fully recovered to pre-covid levels, which is tied to global macroeconomic conditions, Hotels need to strike a balance between implementing technology and providing personalized guest experiences. Implementing sustainable practices requires investment and operational changes, but is increasingly important for attracting environmentally conscious travellers. The industry needs to focus on skill development to meet the demands of a growing and evolving market

Overall, the Indian hospitality industry is poised for continued growth and transformation in 2025, with a focus on technology, sustainability, and providing exceptional guest experiences.

Industry Performance Review

The Indian hospitality industry has experienced strong growth in FY2024-2025, a 7-9% year-over-year increase in revenue, following a high base in FY2024. Key indicators like occupancy rates, average room rates (ARR), and Revenue per Available Room (Rev PAR) have all shown positive trends.

Pan-India premium hotel occupancy was around 70-72% in FY2025, similar to the previous year. ARRs are projected to rise, potentially reaching Rs. 7,500-7,700 in FY2025, according to ICRA Limited. The industry is attracting significant investment, with a projected USD 1 billion in investments by 2028, according to The Economic Times. The industry is also expanding its capacity, with new hotel signings and room additions, particularly in Tier II and Tier III cities.

Strong domestic travel continues to contribute to the industry’s performance. India’s strong GDP growth and rising per capita income are boosting consumer spending and travel. The positive performance and growth outlook are attracting significant investments into the sector. Overall, the Indian hospitality industry is experiencing a period of strong growth and expansion, driven by various factors and supported by positive investor sentiment and strong demand.

Risks, Concerns and Threats

The Indian hospitality industry faces a multitude of risks, concerns, and threats, including cybersecurity breaches, labor shortages, rising operational costs, and the impact of climate change. Data privacy, economic instability, and reputational damage also pose significant challenges Furthermore, the industry must adapt to changing guest expectations and navigate increasing competition.

Increasing costs for utilities, food, and other supplies are putting pressure on profit margins, requiring businesses to find ways to manage costs and potentially pass some of these costs on to customers The industry is grappling with a shortage of skilled and unskilled labor, which can lead to increased workloads for existing staff, decreased productivity, and difficulty in maintaining service standards Climate change is impacting tourism in various ways, including extreme weather events, water scarcity, and changing travel patterns. The industry is also under pressure to become more sustainable and reduce its environmental footprint. Guests are increasingly demanding personalized experiences, digital solutions, and sustainable options, requiring businesses to adapt their offerings and operations. Hotels and other hospitality businesses are increasingly vulnerable to cyberattacks, which can lead to data breaches, financial losses, and reputational damage. Economic instability can impact travel and tourism, leading to decreased demand and revenue for hospitality businesses. The hospitality sector is highly competitive, with both local and international players vying for market share. The industry is constantly evolving, and businesses that fail to adapt to changing technologies and guest preferences may struggle to remain competitive.

Segment Wise Performance & Financial Performance

The key business segment of the company is hospitality and particularly Hotel Industry. Your company has four hotels in its portfolio offering 643 rooms at Agra, Jaipur, Lucknow and Khajuraho under the brand name ‘Clarks’.

Revenue from operations (net) has increased by Rs 640.25 lakh (4 37%) from Rs.14650.59 lakh (previous year) to Rs.15290.87 lakh in current year The expenses of the company have gone up by 999 44 lakh (9 13%) to Rs 11945.43 lakh from previous year figure of Rs.10945 99 lakh on account of increased in employee expenses, power & fuel expenses, and various other expenses

The profit before tax v/as Rs.3971.68 lakh in the current year against profit before tax of Rs.4229.95 lakh in previous year. The profit after tax for the year (before other comprehensive income) was Rs.2973.31 lakh in the current year against profit of Rs. 3181.62 lakh in the previous year. The Total Comprehensive Income was Rs.2980.49 lakh in the current year against income of Rs. 3178.50 lakh in the previous year.

There was a decrease of 5.13% in rooms sold during the current year against the previous year. The occupancy has been dropped by 3.04% in the current year. The Average Room Rate increased by 8.25% in current year against the previous year The growth in Rev PAR was by 4.24% in the current year

Internal Controls

Your Company has in place a system of internal controls, with documented procedures covering all functions in the hotel operating units, Systems of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations. The Company has a systematic process and well-defined roles and responsibilities for people at different hierarchical levels.

Development in Human Resources and Industrial Relations

The Company believes that its intrinsic strength is its people. Your Company strongly believes that human capital is the greatest asset and key differentiator, The Company has always paid special attention to recruitment and development of all categories of staff. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. The Company enjoys harmonious relationship with its employees. The total number of people employed by the Company was 701.

Key Financial Ratios

SI. No Particulars	As on 31.03.2025	As on 31.03.2024
I Debtors Turnover (net credit sales / average accounts receivables)	24.52	19.48
II Inventory turnover (cost of goods sold/closing inventory)	15.81	11.99
III Interest Coverage rato (Earnings before interest & taxes/interest expense)	1198.90	1359.11
IV Current Ratio (current assets/current liabilities)	4.53	3.95
V Debt equity Ratio (Total Liabilities/Total Equities)	0.0016	0.0024
VI Operating Profit Margin (%) (PBT/Revenue from operations)	25.97%	28.87%
VII Net Profit Margin (%) (PAT/turnover)	18.68%	20.96%
VIII Return on Net worth (PAT /Average Equity Capital & other equity)	16.39%	20.98%

Cautionary Statement

Statements made in the Management Discussion and Analysis, describing the Company’s objectives, projections, estimates, predictions and expectations may be forward looking statement within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied

For and on behalf of Board of U. P. Hotels Limited

Bisheshwar Prasad Singh	Apurv Kumar	Rupak Gupta
(Non-Executive Chairman-	(Jt. Managing Director &	(Jt. Managing Director &
Independent Director)	CFO)	CFO)
DIN: 06949954	DIN: 00043538	DIN:00007310